Brandon Hess
MGT-210-002
Whiteny Kuhlin
11/13/2014
Pay and Performance
From an administrative perspective, the performance appraisal helps ensure that people who are performing similar jobs are rated with similar criteria, thereby creating uniformity in the appraisal process. From an employee's view, the appraisal process must be uniform and applied equally in order for it to have any validity. Depending on the size of the company, the standardized performance appraisal is the most efficient method of judging the relative merits of a number of employees. When and if the company's payroll and employees have to be reduced, the appraisals are usually the first item Human Resources looks at to determine who among the workforce might be asked to leave first. Appraisals are, in their best form, used to not only point out an employee's strengths and successes but also to identify areas that need to be improved in order for the employee to reach his or her potential in the company. This is the point at which balance and fairness are critical if the employee perceives that weaknesses are being found simply in order to find an area of criticism, the integrity of the appraisal process becomes uncertain. The goal of an HR group is to make sure appraisals are as unbiased and constructive as possible, with attention given to positive aspects of an employee's performance as well as areas that require some attention. One of the most common rating errors is known as the halo effect. Halo effect occurs when one particular trait about someone causes us to either rate that person very high or very low on performance appraisals. For example, physical appearance often impacts the perception a manager may have of a subordinate. Therefore, because an employee is physically attractive, this individual may receive all high scores throughout the performance appraisal system. A second common error is known as the leniency error. This error is often made in an attempt to avoid conflict. Performance appraisals are an uncomfortable situation for both managers and employees. Managers do not always enjoy giving negative feedback and employees do not like receiving negative feedback. To avoid the awkward situation, some managers will not rate employees accurately. Instead, managers give high ratings to all employees to avoid looking like the bad guy. A simple way to improve performance appraisal accuracy would be to engage the employees in a two-way discussion whenever their performance is the topic. You can improve performance appraisals by involving the employee in the discussion all year long. Then the official performance appraisal day is just an extension of the normal performance discussion. A company's compensation philosophy refers to the set of guiding principles that drive decision making about compensation. In its compensation philosophy, the firm will spell out why it makes the choices it does about how to pay employees. This philosophy differs from business to business, but every company seeks to hire and retain the best talent, and it will express that sentiment in its compensation philosophy. An example would be a non-specific compensation philosophy, it will not provide fixed numbers, percentiles or even a breakdown of what the compensation package includes. Instead the philosophy will focus more on the principles that guide how the business will pay its employees. The compensation philosophy document might describe how wages should motivate and inspire employees to strive towards excellence or how the company will provide rewards and other incentives to top performers without mentioning what these bonuses will be. Another compensation philosophy based on percentiles